522 F.Supp.3d 1216
S.D. Fla.2021Background
- Plaintiff Town Kitchen, LLC operates a South Miami restaurant and held an all-risk commercial property policy with business-income and civil-authority coverage.
- Plaintiff submitted a COVID-19–related claim; insurer denied coverage and moved to dismiss Town Kitchen’s breach of contract and declaratory judgment claims.
- The Policy covers "actual loss of Business Income" caused by a "suspension" from "direct physical loss of or damage to" insured property; civil-authority coverage requires a "Covered Cause of Loss" elsewhere that prevents access.
- Town Kitchen advanced two theories of coverage: (1) loss-of-use (government restrictions and contagion made the premises unusable) and (2) physical-contamination (SARS-CoV-2 particles were or likely were present on surfaces).
- Defendant argued no direct physical loss or damage occurred to the property and, alternatively, coverage was barred by the Policy's pollutant exclusion.
- Court granted the motion to dismiss: neither loss-of-use nor alleged surface contamination amounted to a "direct physical loss of or damage to" property under Florida law and Eleventh Circuit precedent; civil-authority coverage likewise failed and the court did not reach the pollution-exclusion question.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether COVID-19–related business losses constitute a "direct physical loss of or damage to" insured property | Loss-of-use: virus and restrictions made premises unusable; that is a physical loss | No distinct, demonstrable physical alteration occurred—only economic harm from external conditions | Dismissed: economic losses and inability to use premises do not show direct physical loss |
| Whether presence of virus particles on surfaces is a "direct physical loss" (physical-contamination theory) | Virus was likely present on premises; physical contamination is a covered physical loss | Surface contamination can be eliminated by cleaning and does not change property physically | Dismissed: mere contamination/cleaning remedy does not satisfy direct physical loss requirement |
| Whether civil-authority coverage is triggered by government orders related to COVID-19 | Government closure orders prohibited access and were caused by physical danger from virus | Civil-authority coverage requires a Covered Cause of Loss (i.e., direct physical damage elsewhere) that did not exist | Dismissed: plaintiff failed to allege a Covered Cause of Loss at other property, so civil-authority coverage not triggered |
| Whether the Policy's pollutant exclusion bars coverage for coronavirus (if coverage otherwise existed) | Plaintiff disputed exclusion applicability | Defendant argued virus would fall within pollutant definition | Court declined to decide because plaintiff failed to plead prima facie coverage (dismissal on other grounds) |
Key Cases Cited
- Mama Jo's Inc. v. Sparta Ins. Co., [citation="823 F. App'x 868"] (11th Cir. 2020) (cleaning need or routine remediation does not constitute "direct physical loss")
- Auto-Owners Ins. Co. v. Anderson, 756 So. 2d 29 (Fla. 2000) (policy interpretation begins with plain meaning of the contract)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (legal conclusions and conclusory allegations are insufficient to plead plausible claims)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (complaint must plead facts showing a plausible entitlement to relief)
- Great Lakes Reinsurance (UK) PLC v. Kan-Do, Inc., [citation="639 F. App'x 599"] (11th Cir. 2016) (all-risk policies cover fortuitous losses unless specifically excluded)